Tuesday, January 27, 2009

So How Much Political Advantage Does $34 Billion Buy, Anyway?

The world moves fast nowadays. What with all these pre-budget announcements, it's now possible to feel buyer's remorse before the transaction has been completed. I've been saying that the Tories had no option but to accept the Keynesian stimulus argument and produce a budget designed to rope in Liberal support. And I stand by that — as I've been saying the Conservative Party of Canada simply afford to hand over power to the Liberals, be stigmatized as the "party that doesn't do anything for the ordinary guy" in hard times, and run the risk of being out of power for 20 years as a result.

It's understandable that a government would act the way that this one has, as successful politicians have a strong survival interest. The Government slashed it's own throat with the economic statement last fall. The instinctive response is to staunch the blood, wipe up the mess, stitch up the wound and apply bandages to the wounds. Today's budget is the result. But is reasonable to ask how much political capital $34 billion buys. Well, it's not really $34 billion; just the natural effects of the downturn are estimated to produce a $12 billion deficit anyway. So what does $22 billion in stimulus/infrastructure/assistance to the unemployed buy, politically?

This package of outcomes isn't all good. There's some discontent within the party; just peruse my fellow Blogging Tories to sense the signs of mutiny in the ranks. Unambiguously Ambidextrous has managed to get these views a place on the front page of the National Post website. I'm disturbed and sad at the total rejection of the party which some conservatives seem to be contemplating. There's a danger of saying of these discontented, "So what. Where are they going to go?" The Conservative Left used to think that regularly, and say that occasionally, wearing a triumphant smirk, and one of the results was the Reform Party of Canada. Conservative activists are principled and often ornery sorts, so organizing them in support of a necessary political compromise is like herding cats. Stephen Harper is going to spend some of the political capital he has accumulated with the conservative base on this. At the same time it can't let it's policies be dictated by people who don't understand that it's necessary to win power to enact any part of the conservative agenda, so it's self-destructive to demand that a government enact all of it.

The arguments from supposed conservative principle aren't definitive here; there's nothing wrong with running deficits in bad times so long as they are paid for with surpluses in the good. That's something we have to insist that government does, when the time comes. And when that time comes it would be nice if we had a conservative government to try to hold accountable, rather than a Liberal one.

There are better arguments against these tactics. They are, like the arguments for this approach, based on politics. The case would be that this $22 billion just doesn't buy any political advantage nearly worth the expenditure. What has this $22 billion plan bought? 6 to 9 months. Things are going to get worse economically this year, maybe a lot worse. Michael Ignatieff can take 6 months, 9 months, more if he thinks it better, to organize himself, to replenish Grit coffers, and then defeat the Government when he thinks the economy is at its lowest point, with every chance of beating the Conservatives. There better be an awful lot of good things done by the Government during the next 6 or 9 months for this Keynesian adventure to be worth it. One might go further and argue that in the current circumstances, no one can know whether it is, in the long term, the better position for the Conservatives to be, next week, in Government, in Opposition, or in the midst of an election campaign. The best political outcome for the Conservatives might be if the Government was defeated, the Governor General refused a dissolution, and the Leader of the Opposition was invited to form a government. Then the anger of Conservative voters at this "undemocratic" activity might energize the base all the way to the next election, whenever it is.

But I think this argument misses a few things. If the Government had publicly renounced Keynesian stimulus theory, and brought in a $12 billion deficit budget, or worse, a budget cutting services and/or raising taxes to produce a balanced budget, make no mistake, it would have been defeated in an election campaign. It would have the wind behind it at the start, being able to denounce the Opposition for forcing an unnecessary election in a time of crisis, delaying any action to resolve it. It could take some advantage of the distaste with which English Canadians regard the entering into a coalition containing the separatists as a key component. But it would face sensationalized MSM coverage of the job losses that are now occurring every day. It would face the public preference for parties promising to do something in midst of a crisis to those proposing nothing. The conservative economists who oppose Keynesian stimulus would be overwhelmed by the MSM coverage of the plurality of economists who support it in some form. It would face the spillover effects of Obamamania in the States, which has created an appetite for change that Michael Ignatieff could take advantage of. Worst of all, it would face an Opposition that would be led by the inexorable logic of its public positions to effectively band together, promising that another Harper minority government would be defeated on the Speech for the Throne and replaced with a government that would introduce a stimulus program, an infrastructure program, and additional aid for the unemployed. And if Stephen Harper couldn't win a majority against Stephane Dion, he can't win a majority government, at least right now, against Michael Ignatieff.

The recession fighting weapons authorized in the budget won't really be worth the $22 billion they cost, marked as they are with all the inefficiencies attached to government endeavours. But they buy the time necessary to stay alive and to craft a strategy that will prevent a Liberal takeover of power that could last for generations. The difference between their actual value to the public and their real value is thus well worth the cost, even if we have to borrow to pay for them.

Saturday, January 24, 2009

Welcome, Disabled Workers, to the University of Mars

I've long suspected that government job training programs, especially those forcibly attached to a government subsidy, may be among the most useless and inefficient ways that government uses its money. These programs train people who don't want to be there in skills they aren't really interested in having to help them get jobs that don't exist. Well thanks to the Toronto Star for heaping up evidence for my thesis. It seems that many injured workers have been required by the Workplace Safety and Insurance Board as a condition of receiving compensation to enrol in the University of Mars
Let us gather the testimonies of the grateful beneficiaries of the government's concern for their career future:

Carlos Aviles:
"It was a waste of time," he said. "So much money wasted. It's all garbage. The training was inadequate. This is not real school. It's for kids. (But) I have to go there."

Gladys Canelas:
"Someone has to stop this stupid thing," said Canelas, who quit her program in frustration and is now unemployed. "Money, money, money for nothing."

Of course teaching of new skills and skill upgrading for our modern hitech economy is very difficult considering the way our social service budgets are so severely constrained in how much they can spend to l'arn recipients in these marketable new skills. Being able to afford to pay out a mere $33,000 over a 18 months to prepare one for data entry and shelf stocking, or $21,000 to prepare one to be a "customer service clerk" -- how can one expect results when our social service programs are so starved for resources?

You know of course that it would be a lot more effective to let the recipients pick a new trade and an institution to teach it themselves and just give them the money to enroll. But they're much better off deploying the whole long-assembled wisdom of the Government of Ontario in a decision that may determine the whole course of their future life.

I've been thinking of course about the budget. There will be money for job training, Jim Flaherty has said. It's a shibboleth, a panacea, a totem. Not spending money on job training is considered equivalent to saying "We don't care about people losing jobs; they probably deserved it anyway. Let them deliver advertising flyers."

About all we can hope for from the Conservatives is that they take the time and trouble to ensure that their training programs will achieve something, but that's not something I really expect to see. Expect a Star expose of useless new training programs finded in the budget by the conservatives later this year, just about the time that Michael Ignatieff decides that he wants to force an election.

Thursday, January 22, 2009

David Frum's NewMajority.com

This week brings the launch of David Frum's new website NewMajority.com. If you haven't read Frum's 2008 book Comeback, the new venture's statement of purpose will leave you in doubt about just what these people are up to. The key words are these which sum up the basic attitude expressed in Comeback:
Our party has now taken two bad beatings in two consecutive cycles. It looks very likely we are heading for a third. It's not a sign of lack of commitment to our party or our movement to acknowledge these hard facts.

Our goal here at NewMajority.com is to renew and reform our Republican party and the conservative philosophy so that we can again earn the confidence of the American people and govern responsibly and effectively. We don't claim to have all the answers. We are sure that we are asking the right questions.

Comeback ruffled some feathers in the conservative aviary. There are three components to the worldview expressed in Comeback; at least two if not three of them challenge the default position, or at least the default for-public-consumption position, of the conservative establishment. First is an assessment of the future prospects of the Republican Party as they appear at the moment. Frum's is bleak. Significant portions of the electorate, portions that are growing, seem to becoming increasingly hostile to the party. Aversion to Republicans by Hispanics, women, suburbanites, the college-educated -- these things are not going to magically melt away. Many of the GOP's signature issues have exhausted their appeal. For example, income tax cuts? Further significant middle class tax cuts are unsustainable economically; almost 40% of Americans pay no income tax at all and have no need of reductions; 80% of American workers now pay more in payroll taxes than they do in income taxes.

The second issue is what to about all this. Here's where the participants take off their coats and the brawling begins. Much of the movement believes that all that is needed is to return to true conservative principles, to march as in days of yore behind banners of bold colours not pale pastels, to be the party of Ronald Reagan again. Frum isn't buying it, and neither am I. Ronald Reagan didn't prevail by urging his party to ask "What would Barry Goldwater have said? What would Robert Taft have done?" The retrenchment purists are people whose plan if they could redo the Charge of the Light Brigade would be to try to think of a way to make the horses run faster. Frum urges a full, ruthless, corner to corner and ceiling to floor review of the policies the GOP has been running on. This is where Frum is right, and Rush Limbaugh and Laura Ingraham and the official voices of the conservative movement are wrong. Why do we laugh at the way Democrats acted during the Reagan years? Because they refused to look at and think about their now vote-losing positions and kept on losing as a result, always unwilling to believe that their ideas had been rejected again because the public didn't agree with them. There's a chasm here between those who want to be or at least look thoroughly orthodox and those who want to win elections.

The third component of the approach is a grab bag of new policies and strategic revision of old ones to recapture the public imagination. This isn't the place to go through them. I'll just say that Frum certainly used his imagination. I would never have thought of prison reform as a big vote-winning issue, and a government led "war against obesity" seems likely to be effective only in giving Letterman, Leno and every other comedian in the land a free joke every day of the week. I probably disagree with two-thirds of Frum's policy prescriptions, but that's not the point. I think that he's got the right attitude, the willingness to strip down the whole machine and reevaluate the design of every part, and that's what matters. Since the book Frum has gotten into issues that conservatives never touch such as income equality and the failure of the middle class to gain anything from the income growth of the Bush years, even before the meltdown.

About the future of Frum's new website and movement I have no prediction. I confess to know nothing about Frum's stable of opinioners and journalists or whence they have been rounded up. Frum has closed it up at NR and it looks like he's going to be prolific here so the site will always be worth looking at for that alone. Skimming the titles and summaries of the hefty pile of opinion pieces in the first week there might be some danger that the website become something of a nest of social liberals, malcontents and defeatists. In the worst case scenario Frum could be written off as someone who's "gone over to the liberals", and marginalized and ignored.

But I'm wishing the New Majority good health. A lot of the next 4 years is going to be a defensive trench war. It's nice to have someone thinking about new weapons for when we can go on the offensive again.

Monday, January 19, 2009

Fence and Wall Infrastructure

It seems the greens, the unions, the left interest groups have a terrible problem. Asked to come up for ideas for stuff that the President-elect can blow money on, not even all their ingenuity can help them come up with enough projects that can with any plausibility be considered as economic stimulus ramping up jobs and economic demand in anything like the near future. The greens have looked hard but even they cannot come up with their share of the swag. The governors and mayors don't have enough highways, bridges and tunnels, or even mobster museums and waterslides and to blow on the shovel-ready cash that is soon to be heaped on them.

But I have an idea. Highways, tunnels, and bridges — they create construction jobs, jobs that aren't there because the private sector isn't building anything. Well let's think: what other kinds of things can be constructed? Well...hydro poles maybe. Barns and rail tracks and baseball fields.... Hey fences and walls! Like for example the border fence that would allow the U.S. to regain control of its borders but which the Left say can't be done, among other reasons because it costs a zillion dollars and would take forever to complete. Well those are features, not bugs now. We're in a state of economic emergency now and need stuff to spend money on. Many of the plans have already made and could be proceeded with pedal to the floor once those annoying environmental impact studies are thrown overboard in this time of emergency. Now we can make this a national priority and get construction going 24/7.

And the President-elect wants immigration reform. The whole package won't be ready till next year, if ever, but here's a great start — a sign of good faith to those cynical Republicans who do not believe that Democrats really want border control, despite protestations to the contrary. Obama is said to want 80 Senate votes for this package and serious acceleration of border fencing might bring over a few GOP waverers. And an all-out effort at border control would convince many Republicans that giving illegal immigrants a break is acceptable, that for the first time the promise "this is the last amnesty" would be fulfilled.

There's been dispute in the past about how much a border fence would cost. Some say something like $5 billion, opponents say more like $50 billion. But now who cares? The more the better. Where there's dispute what kind of fence should be built, let's get going on both of them.

Barack Obama says he's in favour of border control. Some people don't believe him. The GOP should jump in with ideas, which Obama has solicited, and with amendments to the stimulus package that get this fence going on a priority basis.

Well if you seriously want construction jobs and stimulus I'm just saying....

Friday, January 9, 2009

Artificial Stimulation

It's frigid winter in Canada but happily whatever bleak near-Arctic conditions that led to Prime Minister Harper's brain freeze in December seem to have abated. The provocative and disingenuous economic statement issued by Finance Minister Jim Flaherty in December looked to be the biggest political blunder since the accursed regime of Joe Clark. But the evidence is that the master tactician Stephen Harper that we used to know has retaken occupation of his body. There's evidence of that in the Prime Minister's interview with Maclean's which deserves a close reading.

The Conservative Party's current danger is that if this recession turns out to be severe enough to cause people to start using the D-word, there are only two roles cast for the governing party to audition for: Saviour Of The People Who Protected The Average Canadian and Cold-Hearted Bastard Who Let The Country Go To Hell To Let Big Business Make More Money. F.D.R. or Herbert Hoover. R. B. Bennett starred in the latter role, while Mackenzie King, being very versatile, got to play both parts, the latter in 1929-30, and the former 1935-on.

In order to avoid being cast as the villain in this morality play, the Conservatives need some method acting. They must think, react, and act as if they were people who genuinely believe that a giant "economic stimulus" is what is needed to ameliorate this recession. This is made difficult by the fact that our conservative comrades to the south of the border are vigourously decrying, by radio, television, Internet and all manner of printed word, the uselessness and inefficacy of Barack Obama's forthcoming stimulus program, plus the evidence that FDR's New Deal did nothing to end the Depression and probably exacerbated it. Not to mention the humongous resultant deficits of a huge stimulant injection, which have led Michelle Malkin to name the promised legislation the Intergenerational Theft Act.

Stephen Harper seems to realize the Conservatives' position. From the Macleans interview:
A...I still think the underlying reality is that Canada enters this recession in a pretty strong position compared to most Western industrialized countries. We're entering the recession later; all the indications are it will not be as deep here and we should be able to come out of it sooner. If you look around the world at what other countries are now doing, they're things that Canada did over a year, year and a half ago, particularly some of the big tax reductions they're talking about in the United States, and the sales tax cuts that Prime Minister Brown has bought in Britain.
Q: So why do we need all this stimulus spending, and $30-billion deficits, if we'll be able to ride this out in six months?
A: Well, the reality is that the situation is, notwithstanding all of that, still worse than forecasters were indicating three, four months ago, and we've got to make sure we don't have a deep and prolonged drop in economic activity. So in our judgment, that is going to require fiscal stimulus. Obviously large-scale spending and deficits—even short-term deficits—are not something I particularly relish.
Q: Then why do them?
A: They are what is necessary for the economy now.

Do you sense a certain coherence and conviction in this defence? "They are what is necessary for the economy now" -- not a stirring call to action, is it. Not something likely to win over skeptics and disbelievers, were there to be any. But in his position the Prime Minister unfortunately cannot let himself be fully candid. Later in the interview Harper reminds us that his survival in the last election, despite an economic meltdown in the middle of it, is something of a marvel itself. And now the stimulus package is necessary to avoid a "deep and prolonged drop" not in "economic activity" but in "the Conservative Party's standing in the polls."
There's a chess game going on now between Stephen Harper and Michael Ignatieff and the two are circling each other warily. (Wait -- that's before a boxing match isn't it. Anyway....) Stephen Harper wants to avoid being defeated over the budget because of the possibility that the G-G will deny him a dissolution and the Liberals will take over (probably renouncing any full coalition with the NDP) and never be crowbarred out of power. And another election doesn't look like much fun either even though the Tories are ahead in the polls. So there will be money for infrastructure, both for "shovel-ready" projects and longer term enterprises. (At a minimum the Conservatives can serve the country be ensuring that infrastructure money goes for genuine infrastructure projects, not fixing roofs of municipal hockey rinks in Liberal-held ridings, where a lot of Jean Chretien's "infrastructure" money seemed to end up.) There will be tax cuts, skewed at least somewhat toward the lower and middle classes, despite the evidence that in times like these tax savings are used to reduce debt or saved and not for stimulative spending. And there will be at least some changes to EI to evidence specific concern for the unemployed. (The Government could do worse than to take the Grits' advice and eliminate the two-week waiting period between unemployment and eligibility for EI benefits. That has always struck be as one of the most purposeless and illogical features of welfare policy.) It seems uncertain what Ignatieff's designs are, although the tea leaves seem to say that he is not anxious to take a chance at doing anything that might trigger an immediate election.
Harper's moves may have helped him to recover from the seeming disaster of the December economic statement. His stated plans to avoid making secondary legislation matters of confidence may indicate a desire for a Commons that is stable at least into the fall. But now he must face the consequences of compromise: if the government must budget like Liberals to survive, and must allow the Left to defeat conservative measures without risking dissolution, what do conservatives actually get out of being in government at all? I guess we do have to wait for the budget and Ignatieff's reaction before planning our moves too far ahead. It would be nice if we could be sure that Harper the Chess Master is back in full control of himself again.